Barclays, Citigroup Among Banks Sued Over WM/Reuters Rate

Barclays Plc (BARC), Citigroup Inc. (C) and five
other major banks were sued over allegations they conspired to
manipulate WM/Reuters rates used for determining foreign
exchange prices.

A Haverhill, Massachusetts, benefit fund filed a complaint
yesterday in Manhattan federal court accusing the banks of
violating U.S. antitrust law by fixing the rates. WM/Reuters
rates are an industrywide standard used in determining closing
prices in the $5.3 trillion-a-day foreign exchange market,
according to the complaint.

“Defendants’ manipulation of WM/Reuters rates affected the
pricing of trillions of dollars’ worth of financial transactions
in the United States, including FX trades and other instruments
such as pensions and savings accounts that track global
indices,” lawyers for the Haverhill Retirement System said in
the filing.

Federal investigators have been probing possible
manipulation in the foreign exchange market as well as
allegations of rigging of the London interbank offered rate, or
Libor, an interest rate benchmark. On Oct. 31, government-owned
mortgage financier Fannie Mae (FNMA) sued nine banks claiming that
their manipulation of Libor caused about $800 million of losses
on swap contracts and other investments.

Shared Information

Bloomberg News reported in June that traders at some banks
said they shared information about their positions through
instant messages, executed their own trades before client orders
and sought to manipulate the benchmark WM/Reuters rates. In
August, Bloomberg News reported that recurring spikes in trading
around the periods in which the rates are calculated suggested
that dealers may have been trying to influence the benchmarks.

WM/Reuters rates are published hourly for 160 currencies
and half-hourly for the 21 most-traded. They are the median of
all trades in a minute-long period starting 30 seconds before
the beginning of each half-hour. Rates for less-widely traded
currencies are based on quotes during a two-minute window.

UBS spokeswoman Karina Byrne also declined to comment on
the lawsuit. The Zurich-based bank said in a third-quarter
earnings report released Oct. 29 that it is aware U.S. and
European authorities, including the U.S. Justice Department,
were probing the possibility of manipulation of the foreign
exchange business.

“Following an initial media report in June 2013 of
widespread irregularities in the foreign exchange markets, we
immediately commenced an internal review of our foreign exchange
business,” the company said in the report.

UBS said it is cooperating with authorities and has “taken
and will take appropriate action with respect to certain
personnel as a result of our review, which is ongoing.”

The case is Haverhill Retirement System v. Barclays Bank
Plc, 13-cv-07789, U.S. District Court, Southern District of New
York (Manhattan).